6 ms·

Reminds me of this very interesting article saying that we're wasting our resources buying stuff that simply ends up in landfill http://www.guardian.co.uk/comme

Reminds me of this very interesting article saying that we're wasting our resources buying stuff that simply ends up in landfill http://www.guardian.co.uk/commentisfree/2012/dec/10/on-12th-day-christmas-present-junk?INTCMP=SRCH http://www.guardian.co.uk/commentisfree/2012/dec/10/on-12th-...

guard-of-terra 14y ago
The problem with money in the modern world is that you can buy a lot of things you don't really need. But on the other hand there are a lot of things you want but you struggle to buy because they are too expensive. That is, housing/real estate mainly, education in some countries, medical care in some countries yet. You might stuggle to buy legal protection if need arises. You certainly can't buy a predictable quality of life after when you retire. So we have two large classes of people: there are people who struggle financially with their basic needs - food, shelter, transportation. But there also is a larger class of people who have some free money and they can buy loads of stuff they don't really need - such as described in your article - but they can't buy higher quality of life in terms of real estate, seciruty and predictability of their future. And it doesn't make much sense to save because prices tend to inflate faster than you save. People end up buying useless crap because it's almost free. If someone finds out to produce real wealth much cheaper, we'll see a major redefinition of consumer society.
- csense 14y ago
  > housing/real estate mainly > If someone finds out to produce real wealth much cheaper, we'll see a major redefinition of consumer society. Please learn basic economics. The problem is that there's a limited amount of supply of real estate. Everyone wants real estate, so market participants bid up the price until supply and demand match. If everyone in the world gets substantially wealthier in the next few decades, then they'll just bid higher and higher against each other for the same pool of real estate, driving up the price of real estate until enough people are priced out of the market for supply to again match demand [1]. Of course, Le Chatelier's principle [2] says that as the prices rise, changes will happen that oppose the rise in prices. For example, if you're a company in a land-intensive sector like agriculture, more expensive land means you invest more in existing equipment and techniques that can help you use your land more effectively right now, and R&D into brand new equipment and techniques that will help you use your land more effectively in the future. Likewise, if land prices rise, prices of other goods will change to reflect the cost of land used to produce them. Because land-intensive products are more expensive in this world, people will naturally make decisions on their own to use less of them. Falling demand for land-intensive products will translate directly into reduced demand for land to produce them, opposing the rise in prices. [1] Assuming no new supply of real estate is discovered. Of course, it's possible that new supply sources will be discovered causing a drop in prices, or blunting the impact of the forces that cause housing prices to rise. While we can rule out the discovery of a new continent as happened with the European "discovery" of North and South America, it's conceivable that within 100 years we'll have some combination of space colonies, artificial islands, multilevel cities / more high-rise construction, better technology for doing things in deserts and other presently marginal regions, underground buildings... [2] http://en.wikipedia.org/wiki/Le_Chatelier%27s_principle http://en.wikipedia.org/wiki/Le_Chatelier%27s_principle
  - gizmo686 14y ago
    There is still the underlying point of resource distribution. When you have some people buying things they do not need, while other people cannot afford things they do need, that means that resources went into producing the things that are needed less. Becuase of the decreasing value of money, it is in your best interest to convert your money into stuff, wheather or not that stuff is a good use of resources. I think this inefficiency is invevitable in an economy based around a concept of money simmilar to our own, but we should acknowledge that it is sub-optimum in terms of societal interests.
    - twoodfin 14y ago
      Most "stuff" decreases in economic value faster than money, so I don't really see the point you're making.
      - jared314 14y ago
        Neither can you store the money for long (5+ year) periods. The rate of inflation, and taxes, exceeds the interest on standard bank accounts.
        guard-of-terra 14y ago
        That's why people just waste their money on things they don't need.
    - csense 14y ago
      > it is in your best interest to convert your money into stuff Not necessarily. If by "stuff" you mean "real estate" -- since that is what this part of the discussion was talking about -- keep in mind that it's taxed annually as an asset, at least in most places in the US. Plus any structures get older every year, and things break, and needs heated in the winter even if unoccupied (if you live in the frozen northlands as I do, this is necessary to keep ice from forming in the pipes and causing them to rupture). You have to have renters for real estate to become viable as an investment. And there are a ton of regulatory headaches to comply with. It can be difficult to get rid of problematic tenants because of Equal Opportunity and whatnot, in some places you have to deal with Rent Control, etc. If you've ever watched Judge Judy, you know that some tenants like to trash their place, use your property for illegal activities, make subleases which you wouldn't approve of if you knew about them... In short, being a real estate mogul is a business like any other business: You have to have your hand on the tiller if you want to steer a successful course. For set-it-and-forget-it investing, I'd stick to an index ETF. How either real estate or stock investing is "suboptimum in terms of societal interests" is something I fail to follow.
- brc 14y ago
  You can't really make the argument that people are buying things theydon't value. The mere fact that they are exchanging their labour for these goods proves they value the items. Now, you and I may not value three big screen TVs and a framed IROC print, you and I may prefer to place money into a retirement fund or a good real estate investment. But everyone is different and it's a requirement for a healthy and free market to let people spend their money on what they want. The moment you start choosing what people can spend their money on, that's when you kill a whole future raft of startup companies. If we define real wealth as hard assets like land, factories and valuables, then by definition not everyone can have these. It is impossible by the very nature of what makes these things valuable. In the meantime, life expextancy is longer than ever, even a mum on welfare lives a life with more comforts than a medieval king. There will always be people with less than others. You cannot eliminate this. What you want to avoid is absolute poverty, not relative.
corysama 14y ago
It has bothered me for a while that something like 50% of retail sales happen in November and December. It really makes is seem like around 25% of the retail economy is people buying stuff for others that the others did not value enough to buy for themselves. That's a pretty huge distortion in the market.
- dalke 14y ago
  50% is unbelievably high. The numbers are just under 20% (18.8% of retail sales), says http://www.nrf.com/modules.php?name=Pages&sp_id=1234 http://www.nrf.com/modules.php?name=Pages&sp_id=1234 . Jewelry stores are the highest, and they make under 30% of their sales during November and December. If evenly distributed, then the average sales for 2/12 months would be 17% of yearly sales. While still quite significant, it's not as enormous a disparity as you thought.
  - corysama 14y ago
    That's good to hear. My numbers were from some retailers I knew. Their biz must have been pretty skewed towards the holiday. Thanks for digging out that report!
    - dalke 14y ago
      You may have heard them say "profit", and not "sales." Figure that those two months are 10% higher sales than the rest of the year (19%-17%=2%, and 2/16=12.5%), and that expenses are averaged out over the year while revenue is more seasonal. If normal profit is 5%, then 10 months at 5% and two months at 15% gives 30/(50+30) = 40% of the profit is made during November/December. Or, if it's break-even during 10 months, with $100 million in revenue and expenses, while during November/December it's $101 million in revenue and $100 million in expenses, then the entire yearly profit of $2 million is made during those two months. Although that's only 4/1200 = 0.3% of gross.
- tomjen3 14y ago
  That may happen for some of the gifts, but I have made a habit of buying things that the receiver wants, but doesn't know exists -- i am pretty good at it too.
brc 14y ago
Well, by definition, everything ends up in landfill, even us. I dislike articles that try a dictate how one should be spending money, and try and equate life quality with abstract concepts like how long you can keep things. Maybe for many people a couch that last 5 years is better than a quality piece of furniture that lasts a lifetime. I prefer lasting objects and quality goods and dislike waste - but I would never presume to force my opinion in someone else and force them to have things my way.

guard-of-terra 14y ago

The problem with money in the modern world is that you can buy a lot of things you don't really need. But on the other hand there are a lot of things you want but you struggle to buy because they are too expensive. That is, housing/real estate mainly, education in some countries, medical care in some countries yet. You might stuggle to buy legal protection if need arises. You certainly can't buy a predictable quality of life after when you retire. So we have two large classes of people: there are people who struggle financially with their basic needs - food, shelter, transportation. But there also is a larger class of people who have some free money and they can buy loads of stuff they don't really need - such as described in your article - but they can't buy higher quality of life in terms of real estate, seciruty and predictability of their future. And it doesn't make much sense to save because prices tend to inflate faster than you save. People end up buying useless crap because it's almost free. If someone finds out to produce real wealth much cheaper, we'll see a major redefinition of consumer society.

csense 14y ago
> housing/real estate mainly > If someone finds out to produce real wealth much cheaper, we'll see a major redefinition of consumer society. Please learn basic economics. The problem is that there's a limited amount of supply of real estate. Everyone wants real estate, so market participants bid up the price until supply and demand match. If everyone in the world gets substantially wealthier in the next few decades, then they'll just bid higher and higher against each other for the same pool of real estate, driving up the price of real estate until enough people are priced out of the market for supply to again match demand [1]. Of course, Le Chatelier's principle [2] says that as the prices rise, changes will happen that oppose the rise in prices. For example, if you're a company in a land-intensive sector like agriculture, more expensive land means you invest more in existing equipment and techniques that can help you use your land more effectively right now, and R&D into brand new equipment and techniques that will help you use your land more effectively in the future. Likewise, if land prices rise, prices of other goods will change to reflect the cost of land used to produce them. Because land-intensive products are more expensive in this world, people will naturally make decisions on their own to use less of them. Falling demand for land-intensive products will translate directly into reduced demand for land to produce them, opposing the rise in prices. [1] Assuming no new supply of real estate is discovered. Of course, it's possible that new supply sources will be discovered causing a drop in prices, or blunting the impact of the forces that cause housing prices to rise. While we can rule out the discovery of a new continent as happened with the European "discovery" of North and South America, it's conceivable that within 100 years we'll have some combination of space colonies, artificial islands, multilevel cities / more high-rise construction, better technology for doing things in deserts and other presently marginal regions, underground buildings... [2] http://en.wikipedia.org/wiki/Le_Chatelier%27s_principle http://en.wikipedia.org/wiki/Le_Chatelier%27s_principle
- gizmo686 14y ago
  There is still the underlying point of resource distribution. When you have some people buying things they do not need, while other people cannot afford things they do need, that means that resources went into producing the things that are needed less. Becuase of the decreasing value of money, it is in your best interest to convert your money into stuff, wheather or not that stuff is a good use of resources. I think this inefficiency is invevitable in an economy based around a concept of money simmilar to our own, but we should acknowledge that it is sub-optimum in terms of societal interests.
  - twoodfin 14y ago
    Most "stuff" decreases in economic value faster than money, so I don't really see the point you're making.
    - jared314 14y ago
      Neither can you store the money for long (5+ year) periods. The rate of inflation, and taxes, exceeds the interest on standard bank accounts.
      - guard-of-terra 14y ago
        That's why people just waste their money on things they don't need.
  - csense 14y ago
    > it is in your best interest to convert your money into stuff Not necessarily. If by "stuff" you mean "real estate" -- since that is what this part of the discussion was talking about -- keep in mind that it's taxed annually as an asset, at least in most places in the US. Plus any structures get older every year, and things break, and needs heated in the winter even if unoccupied (if you live in the frozen northlands as I do, this is necessary to keep ice from forming in the pipes and causing them to rupture). You have to have renters for real estate to become viable as an investment. And there are a ton of regulatory headaches to comply with. It can be difficult to get rid of problematic tenants because of Equal Opportunity and whatnot, in some places you have to deal with Rent Control, etc. If you've ever watched Judge Judy, you know that some tenants like to trash their place, use your property for illegal activities, make subleases which you wouldn't approve of if you knew about them... In short, being a real estate mogul is a business like any other business: You have to have your hand on the tiller if you want to steer a successful course. For set-it-and-forget-it investing, I'd stick to an index ETF. How either real estate or stock investing is "suboptimum in terms of societal interests" is something I fail to follow.
brc 14y ago
You can't really make the argument that people are buying things theydon't value. The mere fact that they are exchanging their labour for these goods proves they value the items. Now, you and I may not value three big screen TVs and a framed IROC print, you and I may prefer to place money into a retirement fund or a good real estate investment. But everyone is different and it's a requirement for a healthy and free market to let people spend their money on what they want. The moment you start choosing what people can spend their money on, that's when you kill a whole future raft of startup companies. If we define real wealth as hard assets like land, factories and valuables, then by definition not everyone can have these. It is impossible by the very nature of what makes these things valuable. In the meantime, life expextancy is longer than ever, even a mum on welfare lives a life with more comforts than a medieval king. There will always be people with less than others. You cannot eliminate this. What you want to avoid is absolute poverty, not relative.

corysama 14y ago

It has bothered me for a while that something like 50% of retail sales happen in November and December. It really makes is seem like around 25% of the retail economy is people buying stuff for others that the others did not value enough to buy for themselves. That's a pretty huge distortion in the market.

dalke 14y ago
50% is unbelievably high. The numbers are just under 20% (18.8% of retail sales), says http://www.nrf.com/modules.php?name=Pages&sp_id=1234 http://www.nrf.com/modules.php?name=Pages&sp_id=1234 . Jewelry stores are the highest, and they make under 30% of their sales during November and December. If evenly distributed, then the average sales for 2/12 months would be 17% of yearly sales. While still quite significant, it's not as enormous a disparity as you thought.
- corysama 14y ago
  That's good to hear. My numbers were from some retailers I knew. Their biz must have been pretty skewed towards the holiday. Thanks for digging out that report!
  - dalke 14y ago
    You may have heard them say "profit", and not "sales." Figure that those two months are 10% higher sales than the rest of the year (19%-17%=2%, and 2/16=12.5%), and that expenses are averaged out over the year while revenue is more seasonal. If normal profit is 5%, then 10 months at 5% and two months at 15% gives 30/(50+30) = 40% of the profit is made during November/December. Or, if it's break-even during 10 months, with $100 million in revenue and expenses, while during November/December it's $101 million in revenue and $100 million in expenses, then the entire yearly profit of $2 million is made during those two months. Although that's only 4/1200 = 0.3% of gross.
tomjen3 14y ago
That may happen for some of the gifts, but I have made a habit of buying things that the receiver wants, but doesn't know exists -- i am pretty good at it too.

brc 14y ago

Well, by definition, everything ends up in landfill, even us. I dislike articles that try a dictate how one should be spending money, and try and equate life quality with abstract concepts like how long you can keep things. Maybe for many people a couch that last 5 years is better than a quality piece of furniture that lasts a lifetime. I prefer lasting objects and quality goods and dislike waste - but I would never presume to force my opinion in someone else and force them to have things my way.